Bullish or Bearish? Week of Nov. 27, 2017

Here are the latest technical and sentiment indicators:

Technical Indicators (daily chart)

S&P 500 is above its 50-day MA = Bullish

MACD (S&P 500; 19,39,9) is above its zero line = Bullish

MACD (S&P 500; 19,39,9) is below its signal line = Bearish

S&P 500 support @ 2580

 

Sentiment Indicators (+RSI)

II survey: 

AAII survey: (Nov. 22): 35.5% Bulls; 29% Bears = Neutral

VIX: @ 9.65 = Bearish

RSI: (S&P 500) @ 64.51 = Neutral

Comment: As expected, the S&P 500 rallied during the holiday week. Bitcoin also rallied and has reached bubble levels, but don’t tell that to bitcoin buyers. They seem to think bitcoin’s spectacular rise is normal. I beg to differ. At this time, no one knows the true value of bitcoin, which is what makes it such a dangerous trade.

Regarding the S&P, we’re due for a nasty correction but no one can predict when, although a likely target is a few weeks to a few months from now. One possible scenario: A sudden and severe correction followed by a huge rally. That’s the setup I’m looking for, but I will play it week by week because the market can change on a dime. Meanwhile, the bulls are in control so let’s see how far they can run with the ball. It’s been an impressive rally, but what goes up eventually comes down. I admit this has been a much longer wait than almost anytime in history. 

Bullish or Bearish? Week of Nov. 20, 2017

Here are the latest technical and sentiment indicators:

Technical Indicators (daily chart)

S&P 500 is above its 50-day MA = Bullish

MACD (S&P 500; 19,39,9) is above its zero line = Bullish

MACD (S&P 500; 19,39,9) is has fallen below its signal line = Bearish

S&P 500 support @ 2560

 

Sentiment Indicators (+RSI)

II survey: (Nov. 14): 63.5% Bulls; 15.4% Bears = Bearish

AAII survey: (Nov. 15): 29.4% Bulls; 35.2% Bears = Neutral

VIX: @ 11.43 = Bearish

RSI: (S&P 500) @ 55.24 = Neutral

Comment: The market got a little rocky for a couple of days last week, reminding us of how a real stock market behaves. While the S&P ended the week nearly flat, underneath there is technical damage. A MACD sell signal was triggered during the week, which has led to pullbacks in the past. In addition, the AAII bullish sentiment plunged from 45% to 29%, but not enough to trigger a contrarian buy signal. In addition, the Investor’s Intelligence survey is still as bullish as ever. 

Because of the holidays, it’s possible any pullback will be subdued, but continue to be on guard. Typically, the market enters the holidays in a bullish mood until the end of the year. After all, fund managers are making a final sprint to beat the indexes (and lock in their compensation), so they tend to buy anything that moves. In fact, it would be unusual if the market retreated strongly from here, however, anything is possible so watch closely. The odds are we are going to limp into the end of the year. Nevertheless, watch for signs of deterioration. 

Note: There should be light trading this week due to the holidays, which reminds me: Have a great Thanksgiving! 

Bullish or Bearish? Week of Nov. 13, 2017

Here are the latest technical and sentiment indicators:

Technical Indicators (daily chart)

S&P 500 is above its 50-day MA but pointing down = Neutral

MACD (S&P 500; 19,39,9) is above its zero line = Bullish

MACD (S&P 500; 19,39,9) is equal to its signal line = Neutral

S&P 500 support @ 2560

 

Sentiment Indicators (+RSI)

II survey: (Nov. 7): 64.4% Bulls; 14.4% Bears = Bearish

AAII survey: (Nov. 8): 45.1% Bulls; 23.1% Bears = Neutral

VIX: @ 11.29 = Bearish

RSI: (S&P 500) @ 61.93 = Neutral 

Comment: For the first time in months, the market retreated strongly during the day before recovering some of its losses. Astute market watchers noticed that something changed during the week, i.e. increased selling, which was reflected in a number of indicators. One week does not make a market, which is why this week is so important. The bulls are still in control but their grip appears less strong. Let’s see if the uncertainty carries over into this week.

For a more detailed analysis of the market, here is Lance Robert’s most recent blog. He believes a 3-5% correction is likely: https://goo.gl/BijbDq

 

Bullish or Bearish? Week of Nov. 6, 2017

Here are the latest technical and sentiment indicators:

Technical Indicators (daily chart)

S&P 500 is above its 50-day MA = Bullish

MACD (S&P 500; 19,39,9) is above its zero line = Bullish

MACD (S&P 500; 19,39,9) is equal to its signal line = Neutral

S&P 500 support @ 2560

 

Sentiment Indicators (+RSI)

II survey: (Oct. 31): 63.5% Bulls; 14.4% Bears = Bearish

AAII survey: (Nov. 1): 45.1 Bulls; 28.6% Bears = Neutral

VIX: @ 9.14 = Bearish

RSI: (S&P 500) @ 70.40 = Overbought 

Comment: There is not much change from last week except that more retail investors are catching the bull fever. Technical readings are bullish while sentiment is so bullish it’s a red flag.  While some pros are predicting a major correction, others keep blindly buying at all time highs. Eventually, the market will stop climbing but for now, the bulls are in control. Lately, investors are hopeful there will be another Christmas rally. We shall see.